Simple Interest Calculator
Calculate simple interest earned on a principal amount
Enter values above to calculate
How to Use
- Enter the principal (starting) amount.
- Enter the annual interest rate percentage.
- Enter the time period and select the unit (years, months, or days).
- Click 'Calculate' to see interest earned and final amount.
- Use this for short-term savings, bonds, or simple loan interest estimates.
About Simple Interest
Simple Interest Formula
Simple interest is calculated as: I = P × r × t, where P is the principal, r is the annual interest rate (as a decimal), and t is time in years. The final amount A = P + I. For example, $5,000 at 4% per year for 3 years: I = 5000 × 0.04 × 3 = $600, so A = $5,600.
Simple vs. Compound Interest
With simple interest, you earn interest only on the original principal. With compound interest, you also earn interest on accumulated interest. For short periods, the difference is small. Over 10 years: $10,000 at 5% simple interest earns $5,000; compound interest (monthly) earns $6,470 — a 29.4% difference.
When Simple Interest is Used
Simple interest is used for: short-term personal loans, auto loans, some bonds, savings accounts in some countries, and payday loans. Most mortgages and investment accounts use compound interest. Government Treasury bills and notes use simple interest for their discount calculation.
Converting Time Periods
The formula requires time in years. To convert: months to years = months ÷ 12; days to years = days ÷ 365. For 6 months at 5%: I = P × 0.05 × (6/12) = P × 0.025. For 90 days at 5%: I = P × 0.05 × (90/365) = P × 0.01233.
Key Features
- Simple interest calculation using I = P × r × t formula
- Supports years, months, and days as time units
- Shows interest earned, final amount, daily interest, and monthly interest
- Instant calculation for quick interest estimates